Chevron U.S.A., Inc. v. Utah State Tax Com'n, 920546-CA

• Decision Date: 29 January 1993
• Docket Number: No. 920546-CA,920546-CA
• Citation: 847 P.2d 418
• Parties: CHEVRON U.S.A., INC.; and Amoco Oil Company, Petitioners, v. UTAH STATE TAX COMMISSION; Davis County; and Salt Lake County, Respondents.
• Court: Utah Court of Appeals

Page 418

847 P.2d 418

CHEVRON U.S.A., INC.; and Amoco Oil Company, Petitioners, v. UTAH STATE TAX COMMISSION; Davis County; and Salt Lake

County, Respondents.

No. 920546-CA.

Court of Appeals of Utah.

Jan. 29, 1993.

Rehearing Denied March 26, 1993.

Leonard J. Lewis and John W. Andrews, Salt Lake City, for petitioners.

Jan Graham and Brian L. Tarbet, Salt Lake City, for Utah State Tax Com'n.

Melvin C. Wilson, Gerald E. Hess, Farmington, David E. Yocum, Bill Thomas Peters, Salt Lake City, for Davis and Salt Lake Counties.

Before BENCH, GARFF, and RUSSON, JJ.

OPINION

BENCH, Judge:

Petitioners, Chevron U.S.A., Inc, and Amoco Oil Company, seek review of separate, but congruent, rulings by the Utah State Tax Commission. In both cases, the Commission held that petitioners' refineries would be centrally assessed for purposes of their 1989 property taxes. The cases have been consolidated for purposes of our review. We reverse.

BACKGROUND

The petitioners were notified by the Property Tax Division of the State Tax Commission that the 1989 property taxes on their refineries would be centrally assessed by the state rather than locally assessed by their respective counties. ¹ Petitioners filed for redetermination with the Commission, which then conducted formal hearings. In both cases, the Commission held that the refineries were subject to central assessment under Utah Code Ann. § 59-2-201(1)(d) (1989) ² because they were "appurtenant to mines" (i.e. oil wells) that supplied the refineries with its crude oil. ³ The Commission also held in the alternative that Chevron's refinery was subject to central assessment under section 59-2-201(1)(a) because a portion of the property associated with the refinery crosses the county line between Salt Lake and Davis Counties.

Both petitioners claim that the Commission erroneously interpreted subsection (d). Chevron also claims that the Commission erroneously interpreted subsection (a). ⁴

STANDARD OF REVIEW

At issue in these cases are the Commission's statutory interpretations. Under Utah Code Ann. § 63-46b-16(4)(d) (1989), we may grant relief from agency action if "the agency has erroneously interpreted or applied the law." ⁵ We do not defer to an agency's statutory interpretation unless the legislature has explicitly, or implicitly, granted the agency discretion to interpret the statutory language at issue. Morton Int'l, Inc. v. State Tax Commission, 814 P.2d 581, 588-89 (Utah 1991).

There is no explicit statutory grant of discretion to the Commission to interpret subsections (a) and (d) because the legislature has not expressly directed the Commission to interpret any of the terms found therein by rule. See Belnorth Petroleum Corp. v. State Tax Commission, 845 P.2d 266, 268 (Utah App.1993) (an explicit grant of discretion occurs only when the legislature directs an agency to adopt rules interpreting a given term). ⁶ Nor is there an implicit grant of discretion because any question as to the legislature's intent can be resolved by resort to traditional rules of statutory construction, such as looking to the plain language of the statute. See Morton, 814 P.2d at 589; Ferro v. Department of Commerce, 828 P.2d 507, 510-11 (Utah App.1992) (there is no need for an agency to interpret a statute if it is clear and unambiguous; agency should simply apply the statute according to its plain language). ⁷ We therefore review the Commission's interpretations of subsections (a) and (d) under a correction-of-error standard.

ANALYSIS

Crossing County Lines

In its final decision, the Commission held that Chevron's refinery should be centrally assessed under subsection (a) because a portion of the property straddled the Salt Lake/Davis county line. Section 59-2-201 provides:

(1) [T]he following property shall be assessed by the commission at 100% of fair market value ...:

(a) all property which operates as a unit across county lines, if the values must be apportioned among more than one county or state;

Chevron correctly complains that the Division did not indicate in its initial determination that the refinery was being centrally assessed under subsection (a). Nor did it raise the applicability of subsection (a) in its briefs or arguments before the Commission. Consequently, Chevron was not aware of the Commission's intent to apply subsection (a) until it's ruling appeared in the final decision. Chevron therefore did not have any opportunity before the Commission to present evidence regarding subsection (a), or to argue its proper interpretation.

As asserted by Chevron on appeal, it was improper for the Commission sua sponte to raise and decide an issue that had not been raised by the parties. In Combe v. Warren's Family Drive-Inns, Inc., 680 P.2d 733 (Utah 1984), the supreme court held that a trial court may not adjudicate matters not raised by the parties.

It is error to adjudicate issues not raised before or during trial and unsupported by the record. The trial court is not privileged to determine matters outside the issues of the case, and if he does, his findings will have no force or effect. In law or in equity, a judgment must be responsive to the issues framed by the pleadings, and a trial court has no authority to render a decision on issues not presented for determination. Any findings rendered outside the issues are a nullity.

Id. at 736 (citations omitted).

In a similar ruling, the supreme court recognized in Girard v. Appleby, 660 P.2d 245 (Utah 1983), that even though a trial court may, in its discretion, reopen a case when requested by a party,

no such discretion is afforded the court to reopen [a] case sua sponte. Preservation of the integrity of the adversarial system of conducting trials precludes the court from infringing upon counsel's role of advocacy. Counsel is entitled to control the presentation of evidence, and should there be a failure to present evidence on a claim at issue, it is generally viewed as a waiver.

[T]he interests of justice are not enhanced when the court exceeds its role as arbiter by reaching out and deciding an issue that would otherwise be dead, it not having been litigated at the time of trial.

Id. at 247 (footnote omitted).

While it appears that this issue has not been expressly addressed with regard to a sua sponte decision rendered by an administrative tribunal (as compared to a trial court), the same policy considerations apply. ⁸ We therefore apply the same restrictions outlined in Combe and Girard to the Commission's sua sponte ruling in this case.

It is undisputed that the Division did not request in its pleadings that subsection (a) be invoked. Nor was subsection (a) ever an expressed or implied part of the Division's theory as to why the refinery should be centrally assessed. Only passing reference was made to the refinery's location by Chevron's property tax representative, Christopher Chambers, in response to a question by Chevron's legal counsel during the formal hearing.

Counsel: Is it true, or is it not true, that historically up until the question was raised with respect to the 1989 filings, that there had been a property tax assessment for the refinery at the local as distinguished from the central level?

Chambers: Yes. During my experience with the refinery, prior to the state [action] in 1989, it had been assessed by both Davis and Salt Lake Counties.

Counsel: And the refinery property lies, I take it from your last comment, partly in Salt Lake County, and partly in Davis County?

Chambers: That's correct. The overwhelming majority is in Davis County, and [a] small portion in Salt Lake County.

This was the full extent of evidence relating to the location of the refinery and the manner in which it crossed county lines. Inasmuch as location arose only in passing as part of Chevron's presentation, subsection (a) clearly was not an implied part of the Division's theory of the case. Consequently, we hold that the Commission's decision with regard to subsection (a) was outside the issues presented for adjudication and is therefore a nullity. ⁹

Because subsection (a) was not the expressed or implied theory presented by the Division to justify central assessment, we reverse the Commission's ruling that Chevron's refinery may be centrally assessed under subsection (a).

Appurtenant to Mines

The Commission also found that both refineries are appurtenant to oil wells in which petitioners held proprietary interests and should therefore be centrally taxed under subsection (d). Subsection (d) provides for the central assessment of "all property or surface improvements upon or appurtenant to mines or mining claims." Section 59-2-201(1)(d) (1989). See also Utah Constitution, Art. XIII, § 11 and section 59-2-201(1)(e) (1992) (granting the Commission authority to centrally assess mines). The Commission, relying on the Utah Supreme Court's decision in Amax Magnesium Corp. v. State Tax Comm'n, 796 P.2d 1256 (Utah 1990), reasoned that the refinery was appurtenant to its wells because "the refinery and the oil fields are linked by pipeline and function as a unit with the refinery generally dependent upon the oil fields for the crude oil it refines." Petitioners assert that the appurtenant-property holding of Amax does not dictate the outcome of these cases and that the Commission's interpretation of subsection (d) is erroneous. We agree.

Amax obtained concentrated brine solution from the Great Salt Lake by means of evaporation ponds. The brine solution was then processed at Amax's plant to extract magnesium. When the division sought to centrally assess the plant, Amax asserted that its facility could not be centrally assessed because it was not a mine or a mining operation. The supreme court determined that the precise issue was whether the plant was appurtenant to a mine, and held:

The integration of the plant and the evaporation ponds (mine) in the magnesium extracting process and the practical interpretation and literal...